Bookkeeping is undoubtedly, one of the most critical business functions that help drive a business towards success. This is one of the reasons why hiring an in-house bookkeeper may prove to be a costly investment, especially for small businesses, as they are highly specialized professionals. Nowadays, most startups and small and medium sized enterprises, SMEs, prefer relying on outsourced bookkeeping services to make it work for them, financially and strategically.
See Also: What Does a Bookkeeper Do?
The idea of bookkeeping outsourcing is one that continuously wins you over the more you benefit from it. Since it involves you entrusting a virtual service provider to handle a highly essential activity of your accounting operations, it’s essential to know thedos and don’ts associated with it, so you only end up saving money and not losing it. This guide provides you a comprehensive understanding about how outsourced bookkeeping services operate.
What Are Outsourced Bookkeeping Services?
Bookkeeping outsourcing refers to handing over all your financial transactional duties to a virtual service provider that will prepare and manage your books on your behalf. Outsourced bookkeeping services also allow you to have customized solutions for your business. You can choose to outsource only one part, several, or even the entire accounting activities of your organization and rest assured that none of your transactions will go unreported in your records.
Outsourcing bookkeeping activities will also eliminate the heavy investment and time needed in setting up an in-house bookkeeping department, hiring staff, and paying them every month. With outsourcing, the most convenient bit is to pay for the specific services that you are requesting them to perform. The outsourced bookkeeping service will have experienced, competent people well-versed in the financial industry. This will help you get a clear picture of the financial status of your business based on which you can plan strategic initiatives for your business.
Sounds Great! How Does It Work?
Outsourced bookkeeping services are very simple to implement for your business.
This is how the process works for a majority of the services:
- You need to first select an agency or an online service provider. There are many professional outsourced bookkeeping services available; a quick internet research will get you an exhaustive list of competent bookkeeping and accounting service providers. You will need to evaluate and compare them based on the services and their price plans they are offering. You can even look up public reviews and read about the experiences their existing or past customers have had with them. Websites such as Trustpilot.com offers customer testimonials on outsourced bookkeeping services.
- Once you finalize a service, a contract has to be signed. The service would sign a non-disclosure agreement ensuring that all your data will be kept private and secure. Also, the agreement will contain all the necessary terms and conditions, so it’s better that you take your time to go through it before jumping on board with the service.
- The outsourcing service would then appoint an account manager to work with your company, who would become the single point of contact between you and the service.
- The service will select bookkeeping staff to work on your account. The number of people will depend upon the scope and nature of your work and the size of your business. They will create back-office operations to handle your work, which includes creating data on their software.
- A system would be put in place through which you will be able to upload your data to the service on a daily basis. They will then use this data to update all your records. From there on, the service would manage all your bookkeeping work and your role would be limited only to providing data and answering all queries that the service might have.
- At the end of every month, an invoice based on pre-decided rates along with a monthly report will be sent to you. You will also be provided an annual report at the end of the year. Any queries you might have will be handled by the account manager.
Why Choose to Outsource?
As you may have observed, outsourced bookkeeping services aid greatly in simplifying your finances and provide you hassle-free organizing of your financial transactions.
If you’re still on the fence, here are a couple of more reasons why you should choose outsourced bookkeeping services for your company:
- Outsourcing is good for the bottom line for your business and helps you save a lot of money. The costs involved in setting up a bookkeeping department, hiring people, paying their salaries, and providing them resources can all be avoided through outsourcing.
- If you handle your bookkeeping in-house, then you will need to be involved at every single stage of the process. Your bookkeepers may want your input on various issues and it can easily inhibit you from focusing on more important tasks. Alternatively, you can appoint an experienced bookkeeper and trust them to run the operation independently, but their services will be all the more expensive.
- Outsourced bookkeeping services ensure proper updating and entry of your bookkeeping records. They will also detect any fraudulent activities and ensure there are no mistakes occurring that can affect your business’s credibility. They will ensure every single statement is prepared on time, your taxes are calculated correctly, and returns are filed as per their deadlines. You will remain in total compliance with the law and rest assured that you won’t run into any problems with the IRS.
- When you allow experts to handle your data, you can be assured of both quality and confidentiality of your work. You can also expect professional advice from the bookkeepers that will add value to your operations. They will advise you thoroughly on controlling your expenses and managing your money more efficiently.
The costs involved with hiring outsourced bookkeeping services depend greatly on the nature and complexity of your business and can vary from one company to another. In general, an outsourcing agency would charge anywhere from $6,000 to $24,000 per year. And if you set up a bookkeeping department in-house, you may need to spend somewhere between $52,000 to $83,200 annually. Bookkeeping outsourcing makes more financial sense and its reasonable pricing model is probably one of the major reasons why most companies prefer outsourced bookkeeping services.
At Monily, we have a team of expert bookkeepers who can efficiently manage all aspects of your bookkeeping. In addition to best-in-class bookkeeping services, we also offer tax preparation, payroll, CFO and controller services to help your small business grow. Try our services free for the first two months now and see the incredible results for yourself.